Giants Find New Interest in Once-Tiny Natural Niche

Wal-Mart Goads Top Marketers into Segment

CINCINNATI (AdAge.com) -- Earlier this year, Clorox Co. got the National Advertising Division of the Better Business Bureau to tell tiny natural-household-products marketer Seventh Generation to stop suggesting that household bleach is toxic or dangerous when used as directed.

The fact that it would bother to take to NAD an upstart with estimated sales of $50 million to $70 million-less than a third of what the Clorox brand spent on ads last year-signals mainstream marketers' growing concern over the impact natural marketers are having. Wal-Mart Stores' growing focus on environmental sustainability and organic is helping make natural household and personal care a once-neglected niche not even the biggest package-goods marketers can ignore.

How big?
Colgate-Palmolive Co. has acquired a majority stake in Tom's of Maine; L'Oreal bought natural-beauty-products retailer Body Shop this year; and Procter & Gamble Co. recently applied for trademarks on a "Nature's Expressions" label for detergent and oral care.

But saying how big the category is becoming isn't easy. The FDA has no definition for "natural" in household and personal care, and market researchers vary in estimating the market's size.

VNU's ACNielsen, which tracks sales in natural-food stores, mainstream supermarkets, and drug and mass outlets via its SPINS service, pegged the natural-household-products market at $102.3 million in 2005, up 12%, and natural body care at $588.6 million, up 17%. Packaged Facts puts the natural and organic personal-care market alone at $4.3 billion, projecting it will reach $6.6 billion by 2010.

Even some of the industry's giants are far from giant. Tom's of Maine is estimated by industry analysts to be a $50 million company. Organic food leader Hain's Celestial in the past two years has built a fledgling personal-care business also estimated at around $50 million in annual sales by acquiring the Jason Natural Products and Gia brands.

Shakeup possible
So what will be the impact of major marketers muscling in on the industry? Some say big players could shake up the market, fast. "The odds are that someone will come out with a successful mainstream brand that really is more natural" or at least can own a natural-brand positioning in the minds of consumers, said Ralph Blessing, principal with the consulting firm Arbor Strategy Group.

Mike Indursky, chief marketing and strategic officer of Burt's Bees, perhaps the industry's biggest player, maintains, however, that natural personal-care products are already mainstream. Burt's had sales of $100 million last year and expects to grow 25% this year. "People are much more concerned about what they put in their bodies and put on their bodies," Mr. Indursky said. "They know what they put on their skin gets absorbed. And they're reading labels."

Growing concern about parabens -- preservatives some researchers say are converted into estrogen when absorbed into the body -- is one factor driving natural-product sales, Mr. Indursky said. Of course, the Cosmetic, Toiletry and Fragrance Association notes parabens have been found safe by the Food and Drug Administration.

Another doubt is whether green products will survive a browning of the economy, particularly in categories where, unlike food, performance matters. "When people are doing well and the economy is good, green issues start to sell," Mr. Blessing said. "When the economy is bad, it comes down to what works and doesn't cost too much."

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Jack Neff

Jack Neff, editor at large, covers household and personal-care marketers, Walmart and market research. He's based near Cincinnati and has previously written for the Atlanta Journal Constitution, Bloomberg, and trade publications covering the food, woodworking and graphic design industries and worked in corporate communications for the E.W. Scripps Co.